SHRIRAMFIN - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 4.1
| Stock Code | SHRIRAMFIN | Market Cap | 1,88,223 Cr. | Current Price | 1,000 ₹ | High / Low | 1,044 ₹ |
| Stock P/E | 20.6 | Book Value | 321 ₹ | Dividend Yield | 0.99 % | ROCE | 11.2 % |
| ROE | 16.4 % | Face Value | 2.00 ₹ | DMA 50 | 934 ₹ | DMA 200 | 770 ₹ |
| Chg in FII Hold | -2.40 % | Chg in DII Hold | 2.64 % | PAT Qtr | 2,522 Cr. | PAT Prev Qtr | 2,307 Cr. |
| RSI | 55.9 | MACD | 17.1 | Volume | 1,01,35,305 | Avg Vol 1Wk | 78,46,898 |
| Low price | 525 ₹ | High price | 1,044 ₹ | PEG Ratio | 0.44 | Debt to equity | 3.88 |
| 52w Index | 91.6 % | Qtr Profit Var | 5.33 % | EPS | 48.5 ₹ | Industry PE | 19.4 |
📊 Analysis: Shriram Finance (SHRIRAMFIN) is a fundamentally strong NBFC with healthy ROE (16.4%) and moderate ROCE (11.2%). The stock trades at a P/E of 20.6, slightly above the industry average of 19.4, suggesting fair valuation. EPS of 48.5 ₹ supports earnings visibility, while PEG ratio of 0.44 indicates attractive valuation relative to growth. Dividend yield is modest at 0.99%, providing some income support. Debt-to-equity ratio is high at 3.88, typical for NBFCs but worth monitoring. Quarterly PAT improved (2,307 Cr. → 2,522 Cr.), showing steady growth. Technically, the stock is trading above DMA 50 (934 ₹) and DMA 200 (770 ₹), with RSI at 55.9 showing neutral momentum and MACD (17.1) indicating bullish trend.
💰 Ideal Entry Zone: 930 ₹ – 970 ₹ (near DMA 50 support). Current price (1,000 ₹) is slightly above this zone, so accumulation on dips is advisable.
📈 Exit / Holding Strategy:
- Long-term investors can hold for 3–5 years given strong ROE and attractive PEG ratio.
- Exit strategy: Consider partial profit booking if price approaches 1,030–1,050 ₹ (recent highs).
- Hold as long as ROE remains above 15% and earnings growth sustains. Dividend yield adds minor income support, but focus remains on capital appreciation.
✅ Positive
- Healthy ROE (16.4%) and moderate ROCE (11.2%).
- PEG ratio of 0.44 indicates attractive valuation relative to growth.
- EPS of 48.5 ₹ supports earnings visibility.
- Quarterly PAT growth (2,307 Cr. → 2,522 Cr.).
- DII holdings increased (+2.64%), showing domestic confidence.
⚠️ Limitation
- High debt-to-equity ratio (3.88), typical for NBFCs but risky in downturns.
- Dividend yield modest at 0.99%, not attractive for income-focused investors.
- P/E slightly above industry average (20.6 vs 19.4).
📉 Company Negative News
- FII holdings decreased (-2.40%), showing reduced foreign interest.
- Stock trading close to 52-week high (1,044 ₹), limiting immediate upside.
📈 Company Positive News
- Quarterly PAT improved steadily.
- DII holdings increased significantly, signaling strong domestic support.
- MACD positive (17.1), showing bullish momentum.
🏦 Industry
- Industry PE at 19.4, close to Shriram Finance’s valuation, suggesting fair pricing.
- NBFC sector benefits from rising credit demand and financial inclusion initiatives.
🔎 Conclusion
Shriram Finance is a fundamentally strong NBFC with healthy ROE, attractive PEG ratio, and steady profit growth, making it a good candidate for long-term investment. Best suited for investors who can accumulate near 930–970 ₹ and hold for 3–5 years. Exit around 1,030–1,050 ₹ unless earnings growth accelerates further.